FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Condensed balance sheets for Ayayai Company and Blossom Company on January 1, 2023, are as follows:
Current assets
Plant and equipment (net)
Total assets
Total liabilities
Common stock, $10 par value
Other contributed capital
Retained earnings (deficit)
Total liabilities and equities
Show Transcribed Text
Ayayai
$198,000
495,000
Account Titles and Explanation
$693,000
$104,500
385,000
(To record the stock issue costs)
137,500
66,000
$693,000
On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be
recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue
22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was
$15 per share.
Blossom
$93,500
154,000
On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of
plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.
(To record assets and liabilities acquired)
(To record the direct acquisition costs)
$247,500
$38,500
176,000
58,300
Prepare the journal entries on the books of Ayayai to record the acquisition of Blossom Company's net assets. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter o for the amounts. List all debit entries before credit entries.)
(25,300)
$247,500
Debit
Credit
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Transcribed Image Text:Current Attempt in Progress Condensed balance sheets for Ayayai Company and Blossom Company on January 1, 2023, are as follows: Current assets Plant and equipment (net) Total assets Total liabilities Common stock, $10 par value Other contributed capital Retained earnings (deficit) Total liabilities and equities Show Transcribed Text Ayayai $198,000 495,000 Account Titles and Explanation $693,000 $104,500 385,000 (To record the stock issue costs) 137,500 66,000 $693,000 On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. Blossom $93,500 154,000 On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs. (To record assets and liabilities acquired) (To record the direct acquisition costs) $247,500 $38,500 176,000 58,300 Prepare the journal entries on the books of Ayayai to record the acquisition of Blossom Company's net assets. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) (25,300) $247,500 Debit Credit
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